ECON Exam 1 Multiple Choice

In the economy of Esucarys for 2015, exports were $500, GDP was $6400, government purchases were $1700, imports were $400, and investment was $1800. What was consumption Esucarys in 2015?

$2800

What is real GDP in 2020?

$3200

What is the present value of $525 paid one year from now discounted at 5%?

$500 (PV= FV/(1+r)to the N power 525/(1+.05)to the 1 power =500

Which type of unemployment occurs when there is a recession?

Cyclical

Suppose a college student and Jeff Bezos, the owner of Amazon, each find a $100 bill on the ground. Who would economists argue gains more utility (happiness) from finding the $100 bill and why?

college student; diminishing marginal utility

Wegman's is considering expanding beyond its current market and opening new grocery stores. Without any internal funds, Wegman's will

demand the required funds by selling bonds

A Nobel laureate in economics predicted in his 1960 textbook that the Soviet Union would overtake the US economy because the Soviet Union had a higher rate of investment than the US. In 1960, the Soviet Union and US were both capital rich countries, so the Soviet Union was never able to overtake the US economic production through investing more because

diminishing returns to capital

Macroeconomists study

economy-wide phenomena

A measure of the volatility of a variable is its

standard deviation (how much something moves around a price)

If the wage in the market is kept above the equilibrium wage for any reason, the result is

structural unemployment

Maria buys new equipment for her dental office with funds she borrowed from a bank that raised funds from depositors. Which of the following is correct in macroeconomics?

Maria is an investor

Which of the following are accounted for in GDP

none of the above; equitable income distribution depletion of natural resources enjoying time with friends

Suppose a person is offered a coin toss bet, heads they win $1000, tails they lose $1000. A risk averse person would

not take the bet since they dislike losing $1000 more than they enjoy winning $1000

Beijia is purchasing her first home today. The house was built in 2015. Beija's purchase price for the home would count in GDP accounting as

not this year's investment (I) also not this year's GDP (Y)

The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called

physical capital

What is the rate of real GDP growth from 2019 to 2020?

0%

If the nominal interest rate is 2.5% and the inflation rate is 2%, what is the real interest rate?

0.5%

What is the consumer price index for 2020?

100

Since 1900, US GDP per capita has grown about 2% per year. Currently, US GDP per capita is around $55,000. If US GDP per capita continues to grow at the same rate, in what year will it be $110,000?

2054

What is the inflation rate for 2020?

43%

What is the term for a worker that has been unemployed but gives up looking and leaves the labor market?

Discouraged worker

The median car price was $12,000 in 1985 and the CPI was 120. Today the median car price is $20,000 and the CPI is 240. In real terms,

care were more expensive in 1985 (12,000 x 240/120 year T = 24,000)

Government purchases (G in our national accounting identity) include spending on goods and services by

federal, state, and local governments

As iPhones and other smartphones became widely available during the 2000s, this introduced a problem in measuring the cost of living between the 1990s and 2000s which economists would refer to as

introduction of new goods

In a closed economy, when public saving falls by $2 billion and private saving falls by $1 billion, then

investment falls by $3 billion